City Council Approves the Refunding of Bonds Giving a $1.3 Million Boost to the
City's Pension System
PROVIDENCE, RI (December 9, 2020)…Tonight, the City Council voted to approve the refunding of the City's bond portfolio. The refunding of bonds is much like the refinancing of homes, providing efficiency and better interest rates, which yield savings.
"I want to thank the Committee on Finance, our Council finance team, and the City's finance team for their dedication to ensuring that we are doing what we can, when we can, to help address our pension liability. It is not always easy but finding savings to help address our fiscal obligations is paramount," stated Council President Sabina Matos (Ward 15).
The 2010 bond's refunding will realize more than $1.3 million in net savings for the City of Providence and will not extend the life of the bond, nor will it cause the City to incur an increase in its financial obligations.
"Refunding bonds at this time is an important cash management tool," stated Chairman of the Committee on Finance and Majority Whip John J. Igliozzi, Esq. (Ward 7). "It is what you do with the savings that are realized from refunding that is important. The Committee has wisely and clearly stated that the funds should go toward the City's pension fund. This will provide some relief to our more than billion-dollar unfunded pension liability. The Committee on Finance are stewards of the City's finances, and it is mission-critical that we remain laser-focused on these long-term obligations."
The City Council has directed the City's Finance Director to ensure that any net savings from the refunding of the bonds will be used to pay a pension payment above one hundred percent of the Annual Required Contribution and cannot supplant any pension payment. Guaranteeing the additional $1.3 million in savings from the bond refunding go towards the City's outstanding pension liability.
Vice-Chair of the Committee on Finance and City Council Majority Leader Jo-Ann Ryan (Ward 5) shared, "With the current low interest rate environment, the City is wise to be proactive in its bond management strategy. Directing the realized savings towards our pressing long-term fiscal obligations makes good sense. The Committee on Finance has an obligation to our taxpayers to be fiscally responsible and prudent with these funds. Ensuring that savings are put towards the City's pension is an important step in that direction."
The resolution was passed tonight by the City Council and will allow for the City to refund the bonds before the end of the calendar year.
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